Yahoo Finance Everything Renters Need To Know About Having A Guarantor
If you're a recent graduate (especially in New York City), have terrible or even no credit history, are unemployed, or aren't a resident of the United States, you likely know the guarantor situation like the back of your hand. For those of you who don't know-or are facing it for the first time-a guarantor is someone who signs onto a tenant's lease guaranteeing that they will cover the rent in the event that the tenant cannot pay it themselves.
This is particularly important in cities like NYC because, as StreetEasy writes, "apartment rentals are expensive and good ones are scarce, [so] landlords and leasing agencies don't want to waste time on potential renters who are considered 'financially questionable.'" In other words, if you're looking to rent in the Big Apple (or other hot real estate markets), you've come to the right place. Here's what you need to know before you start apartment hunting:
How Do I Know If I Need A Guarantor?
Unfortunately, most landlords and leasing agents in NYC require renters to make 40-45 times the monthly rent. So if your dream apartment costs $2,500 a month and you don't make at least $100,000 a year, you're going to need a guarantor. Often, this means you fall into one of these categories, StreetEasy reports:
You have bad or no credit history
You're unemployed
You have no rental history
You're a recent college graduate
You're a non-U.S. resident in the states for work or school
What If I Have Roommates?
Having roommates makes the situation a little easier, though it does not change the 40-times-the-monthly rent rule. Say the rent is $2,500/month divided among three roommates-the combined total of all roommates' salaries must then add up to $100,000 in order for you to not need a guarantor. If the combined sum of salaries is not 40 times the monthly rent, you'll need one.
Who Can Qualify As A Guarantor?
Many times parents act as guarantors for their children. However, if this isn't an option, friends and other relatives are also great options. Here's the catch: While you would have to make 40 times the monthly rent in order to qualify on your own for an apartment in NYC, guarantors are expected to have both higher credit scores and greater salaries. So, according to StreetEasy, they must make 80 times the monthly rent in order to qualify as a guarantor. For that $2,500, you'll need a guarantor who earns $200,000 annually.
What If I Don't Have A Qualified Guarantor?
Don't worry, you're certainly not alone! If you don't have anyone who can act as your guarantor, you can actually pay companies like The Guarantors and Insurent to do so.
What Do I Need From My Guarantor Before Apartment Hunting?
When you go to apply for the apartment, you should already have everything together. Don't wait until you've found that dream spot before you gather your things. You and your guarantor will likely need to provide a copy of your photo ID and two recent pay stubs, as well as agree to having a credit check run, according to The Spruce.
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